I always wondered why companies used body shops. I could justify the practice if it was truly short term work, but it seems so many people just become perma-temps. I know several people who've been contractors at the same client firm for more than five years. Why don't companies want to hire employees?

In Mumbai during dotcom era I have seen the companies with following names 1)SUN Macro systems 2)Macrosoft Solutions 3)International Institute Of Computer Science and Research.(Size of one of the center of this company was 40 feet x 40 feet(I have seen with my own eyes)) I think all these were (are) started by people who don't know abcd of computer science and sole aim is to earn money by any means.Many of them were just Body Shops.

Less risk, less cost. The company doesn't have to provide benefits, and the company also has the chance to evaluate a worker over a period of time before deciding whether or not they want to hire them.

Rufus BugleWeed
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Joined: Feb 22, 2002
Posts: 1551

posted Sep 04, 2002 13:51:00

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Jason Menard Less risk, less cost.

I've worked as a contractor for many years. When I tell people the company does it because it cost less, they look at you like your crazy, shake their head, and tell you "No Way". Does anybody think kick backs or the ability to view health records are motivators?

Jason Menard
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Joined: Nov 09, 2000
Posts: 6450

posted Sep 04, 2002 14:17:00

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Originally posted by Rufus Bugleweed: When I tell people the company does it because it cost less, they look at you like your crazy, shake their head, and tell you "No Way".

That's because most people don't consider any costs past salary. The companies do not have to provide health insurance and other benefits (tuition assistance, vacation, legal, 401k, whatever) to contractors. Nor do they have to provide career growth and development for contractors. People seem to forget this. If you are a direct employee of a company, besides your salary and benefits, you would expect a raise every now and then, possibly bonuses. Additionally the company may have to pay to send you for training every so often. Then there is always whatever retirement plan the company has (be it 401k or a more traditional plan). Let's say the company hired you as a relatively inexperienced person at $50k. A few years later and your salary is now $70k. On top of that increase in salary, you have been collecting benefits for the entire time. If the company hired a contractor, they would likely be paying the same fixed amount for that position over the life of the contract. That position will always be filled at roughly that rate. No promotions necessary, no training, no retirement. This makes a big difference over the long run to a company. The federal government is a perfect example of this. There has been a big move in different sectors of the government to outsource as much as they can, particularly IT. They are saving tons of money by doing this. Yes contractors generally make a bigger salary when compared to the salary of the government person being replaced, but the contractors don't collect retirement or other benefits from the government, and the government doesn't have to pay for training or career development.

Also, contractors can be fired much more quickly than permanent hires. With permanent hires (at a few of the places I'ved worked) larger corporations couldnd't just tell you to leave that day. There was a procedure to go through that the HR department stipulates(one of the old timers at where I work now told me that in the past the process took at least 90 days, now its much shorter). Now, the manager can drop you pretty quickly (i.e. end of day) for any reason, maybe you just aren't fitting in with the team. I'm not saying managers do this a lot, but they do have much more power to do so now. In addition, some companies probably think that many IT people switch jobs every 2 years or less (at least in the late 90's), so there is no point in paying out extra benifits to gain employee loyalty, let alone take the time to groom an inexperienced programmer into a top performer over a period of years. I think this is a bit of a cop out for companies, but it is an excuse for some. Jon Jon Jon

SCJP<br/>
"I study politics and war that my sons may have the liberty to study mathematics and philosophy in order to give their children a right to study painting poetry and music."<br />--John Adams

sridhar satuloori
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Joined: Nov 05, 2001
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posted Sep 05, 2002 02:20:00

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One reason i feel for this body shops to grow is somehow people wants to work US, UK and other countries where you get higher pay(converted to native currency) than u are getting in ur mother land for the same work. This is mostly Engneers who encourage these kind of body shops and body shoppers takes the advantage of the competition and skills, and they dont pay anything..

found my own answer: appeal denied. Had all the links and a more informative post created before my network crashed and forced me to reboot. Jamie [ September 05, 2002: Message edited by: Jamie Robertson ]

Originally posted by Jon McDonald: In addition, some companies probably think that many IT people switch jobs every 2 years or less (at least in the late 90's), so there is no point in paying out extra benifits to gain employee loyalty...

Yep, managers complain that no one is loyal to the company but then show no loyalty to any employees. We truly live in a Dilbert world.